The Italian Competition Authority (ICA) has opened an
Article 102 TFEU investigation against the national rail incumbent in the case
A 519 Servizio di Trasporto Pubblico Ferroviario nel Veneto (Veneto Rail Public Transport Network).
The regulatory
background
The EU Regulation EC 1370/2007 lays down that the
contract for the provision of rail public transport services are awarded by
means of tender competitive procedure or alternatively they can be awarded to
an in-house supplier. The maximum length of the contracts is fixed in 10 years
though it can be prolonged by further 5 years. Following the amendments brought
by the Regulation EU 2238/2016 to the EU Regulation EC 1370/2007, starting from
2023 the suppliers of rail public transport services will to be selected through
competitive tender procedures. In addition to that, Directive 2012/34/EU lays
down the principles of accounting separation and functional separation as for
the provision of rail transport services and the management of the rail network
to guarantee to all rail operators access on fair and non-discriminatory conditions
to the rail network.
The facts
of the case
The principle of separation has been implemented by
the Italian authorities by conferring the management of the rail network and
the provision of rail transport services to two distinct entities, Rete
Ferroviaria Italiana (RTI) and Trenitalia (TI), respectively. Both RFI and TI belonged
to the same group, Ferrovie dello Stato (FS TI had a natio
By the decision no. 29/2018 of 11 January 2018 the authority
of the Region of Veneto (RV) conferred on TI the contract for the supply of
rail transport services in the Veneto regional system for 15 vears. Arriva Rail
Italia (ARI), a competitor of TI, filed a complaint with the ICA indicating a
close link between the award of the above contract to TI and the RFI commitment
to upgrade the Veneto rail network.
The decision
of the ICA
The relevant markets were identified in the market for
the management of the rail network, in which RFI enjoyed a legal monopoly, and
the market for the provision of rail public transport services by rail of which
TI had the exclusive supplier by way of the contract awarded to it by the RV.
In the ICA’s view the scenario emerging from the evidence
collected in the preliminary investigation is that, FS promised to make
substantial investments to enhance the Veneto rail system so to convince the RV
to not call for a tender procedure to select the new supplier of rail transport
services. In other words, FS made the RFI investment to upgrade the Veneto rail
system and the TI purchase of new rolling stocks to be employed on the Veneto
rails upon the RV directly awarding the contract for provision of rail transport
services to TI. This sort of tying strategy gave FS a competitive advantage
unmatchable by its competitors. In this way, FS abused its dominance position
by eliminating any competition for the market for the provision of public
transport services by rail in Veneto until 2032 when the contract awarded to TI
would expire. Moreover, the conducts of FS also breached the EU law principle
of separation between suppliers of rail transport services and managers of rail
infrastructure.
Conclusion
Apparently, the gist of the Veneto Rail Public Transport Network case is the links between the
rail infrastructure manager, RFI, and the train operator, TI. They are formally
different legal entities distinct, though being sister companies owned by the
same mother company, FS. The ICA feared that RFI leveraged its monopoly
position to preserve the market competition of TI by influencing the decision
of the contracting authority, RV, to not organize a tender procedure for the
selection of the new train operator to the detriment of competitors that might
have otherwise bid for the rail services. The ICA has now to verify whether the
FS group had effectively abuse its dominance by eliminating the competition for
the market for the provision of rail transport services on the Veneto rails.
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